WillScot Reports Third Quarter 2024 Results
WillScot (WSC) reported Q3 2024 results with revenue of $601 million and Adjusted EBITDA of $267 million, up 1% year-over-year. The company posted a loss from continuing operations of $70 million, including a $180 million McGrath RentCorp merger termination fee. Adjusted EBITDA Margin expanded to 44.4%, up 50 basis points year-over-year. The company generated Adjusted Free Cash Flow of $143 million at a 24% margin and maintained leverage at 3.4x. WillScot updated its FY 2024 Adjusted EBITDA outlook to $1,050-1,070 million, citing headwinds in non-residential construction affecting top-line revenue.
WillScot (WSC) ha riportato i risultati del terzo trimestre 2024 con ricavi di $601 milioni e un EBITDA rettificato di $267 milioni, in aumento dell'1% rispetto all'anno precedente. L'azienda ha registrato una perdita dalle operazioni continuative di $70 milioni, inclusa una commissione di terminazione della fusione con McGrath RentCorp di $180 milioni. Il Margine EBITDA Rettificato è aumentato al 44,4%, con un incremento di 50 punti base rispetto all'anno scorso. L'azienda ha generato Flusso di Cassa Libero Rettificato di $143 milioni con un margine del 24% e ha mantenuto un leverage di 3,4x. WillScot ha aggiornato la sua previsione di EBITDA rettificato per l'intero anno 2024 a $1,050-1,070 milioni, citando ostacoli nella costruzione non residenziale che influenzano il fatturato.
WillScot (WSC) informó los resultados del tercer trimestre de 2024 con ingresos de $601 millones y un EBITDA ajustado de $267 millones, un aumento del 1% en comparación con el año anterior. La empresa registró una pérdida de operaciones continuas de $70 millones, incluyendo una tarifa de terminación de fusión con McGrath RentCorp de $180 millones. El Margen EBITDA Ajustado se expandió al 44.4%, un aumento de 50 puntos básicos en comparación con el año pasado. La empresa generó Flujo de Caja Libre Ajustado de $143 millones con un margen del 24% y mantuvo un apalancamiento de 3.4x. WillScot actualizó su perspectiva de EBITDA ajustado para el año fiscal 2024 a $1,050-1,070 millones, citando obstáculos en la construcción no residencial que afectan los ingresos.
WillScot (WSC)는 2024년 3분기 결과를 보고하며 $601 백만의 수익과 $267 백만의 조정된 EBITDA를 발표했습니다. 이는 전년 대비 1% 증가한 수치입니다. 회사는 지속 운영에서 $70 백만의 손실을 기록했으며, 여기에는 $180 백만의 McGrath RentCorp 합병 종료 수수료가 포함됩니다. 조정된 EBITDA 마진은 44.4%로 확대되었으며, 이는 전년 대비 50 베이시스 포인트 증가한 것입니다. 회사는 조정된 자유 현금 흐름을 $143 백만으로 생성했으며, 마진은 24%입니다. 그리고 레버리지는 3.4배로 유지되었습니다. WillScot는 FY 2024 조정 EBITDA 전망을 $1,050-1,070 백만으로 업데이트했으며, 비주거 건축에서의 역풍이 매출에 영향을 미친다고 언급했습니다.
WillScot (WSC) a annoncé les résultats du troisième trimestre 2024 avec un chiffre d'affaires de $601 millions et un EBITDA ajusté de $267 millions, en hausse de 1% par rapport à l'année précédente. La société a affiché une perte des opérations continues de $70 millions, y compris des frais de résiliation de fusion de $180 millions avec McGrath RentCorp. La marge EBITDA ajustée a augmenté à 44,4%, soit une hausse de 50 points de base par rapport à l'année dernière. La société a généré un flux de trésorerie libre ajusté de $143 millions avec une marge de 24% et a maintenu un effet de levier de 3,4x. WillScot a mis à jour ses prévisions d'EBITDA ajusté pour l'exercice 2024 à $1,050-1,070 millions, citant des vents contraires dans la construction non résidentielle affectant les revenus.
WillScot (WSC) berichtete über die Ergebnisse des dritten Quartals 2024 mit einem Umsatz von $601 Millionen und einem bereinigten EBITDA von $267 Millionen, was einem Anstieg von 1% im Jahresvergleich entspricht. Das Unternehmen verzeichnete einen Verlust aus fortgeführten Betrieben von $70 Millionen, einschließlich einer Kündigungsgebühr von $180 Millionen für die Fusion mit McGrath RentCorp. Die bereinigte EBITDA-Marge erweiterte sich auf 44,4%, ein Anstieg um 50 Basispunkte im Vergleich zum Vorjahr. Das Unternehmen generierte einen bereinigten freien Cashflow von $143 Millionen bei einer Marge von 24% und hielt eine Verschuldung von 3,4x aufrecht. WillScot hat seine Prognose für das bereinigte EBITDA für das Geschäftsjahr 2024 auf $1,050-1,070 Millionen aktualisiert und dabei Herausforderungen im nichtwohnlichen Bauwesen erwähnt, die sich auf die Einnahmen auswirken.
- Adjusted EBITDA margin expanded to 44.4%, up 50 basis points YoY
- Generated $143M Adjusted Free Cash Flow at 24% margin
- Maintained strong 17% Return on Invested Capital
- Average monthly rates up 6% YoY in modular and 9% YoY in storage
- Reduced variable costs by over $20M in Q3
- Revenue declined to $601M from $605M YoY
- $70M loss from continuing operations
- Diluted loss per share of $0.37
- Reduced FY 2024 Adjusted EBITDA guidance
- Headwinds in non-residential construction impacting volumes
Insights
The Q3 results present a mixed picture with some concerning trends but strong operational efficiency. Key observations:
Strengths:
- Impressive margin performance with Adjusted EBITDA margin expanding to
44.4% - Strong cash flow generation with
$143M Adjusted Free Cash Flow at24% margin - Effective cost management, reducing variable costs by over
$20M - Healthy
17% Return on Invested Capital
Challenges:
- Revenue declined slightly to
$601M due to non-residential construction headwinds - Net loss of
$70M including$180M McGrath termination fee - Reduced FY2024 EBITDA guidance to
$1,050-1,070M
The company's operational efficiency and cash generation remain strong despite market headwinds, positioning it well for potential recovery in 2025.
The temporary space solutions market is showing interesting dynamics:
Market Indicators:
- Weakness in small-scale, rate-sensitive customers but stability in larger projects
- Strong national account backlogs suggest resilient demand from major customers
- Non-residential construction bottoming later than expected
- Value-Added Products showing growth potential with doubling run-rates
The company's strategic focus on enterprise accounts and new verticals, combined with operational improvements and digital capabilities, creates multiple growth levers for 2025. The market position as a pure-play temporary space specialist provides competitive advantages in targeting underpenetrated segments.
Outstanding Margin and Cash Flow Performance Continues - Focus Turns to Growth in 2025
PHOENIX, Oct. 30, 2024 (GLOBE NEWSWIRE) -- WillScot Holdings Corporation (“WillScot” or the “Company”) (Nasdaq: WSC), a leader in innovative temporary flexible space solutions, today announced third quarter 2024 results including key performance highlights and market updates.
- Generated revenue of
$601 million , loss from continuing operations of$70 million and diluted loss per share of$0.37 , including the$180 million McGrath RentCorp merger agreement termination fee ("termination fee").- Adjusted income from continuing operations excluding the termination fee, restructuring, and transaction-related charges was
$72 million and Adjusted Diluted Earnings Per Share was$0.38
- Adjusted income from continuing operations excluding the termination fee, restructuring, and transaction-related charges was
- Delivered Adjusted EBITDA of
$267 million , up1% , with Adjusted EBITDA Margin expanding sequentially to44.4% and up 50 basis points year-over-year. - Generated Adjusted Free Cash Flow of
$143 million at a24% margin. - Maintained leverage within our stated 3.0x to 3.5x range at 3.4x Net Debt to Adjusted EBITDA as of September 30, 2024.
- Generated
17% Return on Invested Capital2 ("ROIC") over the last 12 months. - Returned
$276 million to shareholders by repurchasing 7.1 million shares of Common Stock, reducing our share count by3.3% over the twelve months ended September 30, 20241. - Updated FY 2024 Adjusted EBITDA outlook range to
$1,050 million to$1,070 million .
Brad Soultz, Chief Executive Officer of WillScot, commented, “Our team continued to execute well in Q3, delivering record third quarter Adjusted EBITDA Margins, with Adjusted Free Cash Flow and Return on Invested Capital also near record levels. Headwinds in non-residential construction impacted top-line revenue, particularly among smaller scale and rate sensitive customers. In contrast, we continue to see steady demand across larger projects and strong backlogs among our national accounts and general contractors. And we anticipate that the overall operating environment will only benefit from interest rate and political certainty. These indicators, combined with our recent investments in our commercial and operations platform and accelerating run-rates in our newer product categories, give us confidence in our growth prospects for 2025."
Soultz continued, “As non-residential construction starts activity continues to bottom, we’ve diligently invested in and executed significant commercial and operational improvements, beginning with the combination of the legacy modular and storage field sales and operations teams in January, our final major systems integration in March, consolidation under the WillScot brand in July, and the introduction of powerful new digital and commercial capabilities. These improvements are in place across our network, which allow us to leverage our scale to go to market as a single organization, and we believe that they represent significant points of operating leverage heading into 2025. In parallel, we are accelerating development of enterprise accounts and new verticals, which are under-penetrated and areas where our positioning as the only pure-play turnkey temporary space specialists resonates most powerfully. Finally, we continue to expand into adjacent solutions through a balanced combination of organic growth, acquisitions, and innovation. And while those contributions were modest in 2024, their run-rate doubled through the course of the year and we expect that they can double again in 2025, giving us new levers with which to grow the business.”
Soultz concluded, “With our longer-term milestones very much in focus, we will continue to execute our disciplined approach to capital allocation, which has returned over
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands, except share data) | 2024 | 2023 | 2024 | 2023 | |||||||||||
Revenue | $ | 601,432 | $ | 604,834 | $ | 1,793,203 | $ | 1,752,391 | |||||||
(Loss) income from continuing operations | $ | (70,475 | ) | $ | 91,516 | $ | (61,086 | ) | $ | 255,516 | |||||
Adjusted income from continuing operations2 | $ | 72,252 | $ | 93,232 | $ | 215,308 | $ | 262,121 | |||||||
Adjusted EBITDA from continuing operations2 | $ | 266,863 | $ | 265,480 | $ | 778,448 | $ | 773,663 | |||||||
Gross profit margin from continuing operations | 53.5 | % | 56.2 | % | 53.8 | % | 56.5 | % | |||||||
Adjusted EBITDA Margin from continuing operations (%)2 | 44.4 | % | 43.9 | % | 43.4 | % | 44.1 | % | |||||||
Net cash (used in) provided by operating activities | $ | (1,562 | ) | $ | 190,998 | $ | 382,725 | $ | 541,918 | ||||||
Adjusted Free Cash Flow2,5 | $ | 143,144 | $ | 147,768 | $ | 417,107 | $ | 410,309 | |||||||
Diluted (loss) earnings per share from continuing operations | $ | (0.37 | ) | $ | 0.46 | $ | (0.32 | ) | $ | 1.25 | |||||
Adjusted diluted earnings per share from continuing operations2 | $ | 0.38 | $ | 0.47 | $ | 1.12 | $ | 1.28 | |||||||
Weighted average diluted shares outstanding | 188,281,346 | 199,258,304 | 189,362,364 | 204,461,042 | |||||||||||
Adjusted weighted average diluted shares outstanding2 | 190,181,020 | 199,258,304 | 191,662,791 | 204,461,042 | |||||||||||
Net cash (used in) provided by operating activities margin | (0.3) % | 31.6 | % | 21.3 | % | 30.8 | % | ||||||||
Adjusted Free Cash Flow Margin (%)2,5 | 23.8 | % | 24.4 | % | 23.3 | % | 23.3 | % | |||||||
Return on Invested Capital2 | 16.5 | % | 17.6 | % | 16.0 | % | 17.4 | % | |||||||
Third Quarter 2024 Results2
Tim Boswell, President and Chief Financial Officer of WillScot, commented, “Revenue for Q3 2024 was
Boswell continued, “Given the operating environment, we reduced variable costs by over
Boswell concluded, “We are reducing our outlook to a midpoint of
Capitalization and Liquidity Update2
As of and for the three months ended September 30, 2024, except where noted:
- Net cash used in operating activities was
$1.6 million . Excluding one-time, nonrecurring payments for the McGrath termination fee and transaction costs from terminated acquisitions of$180 million and$23 million , respectively, the Company generated$143 million of Adjusted Free Cash Flow, down3% year over year. - Invested
$59 million of net capital expenditures in the quarter, up35% year over year, primarily supporting growth in new product lines. - Invested
$13 million of capital in one acquisition during the quarter, with$161 million invested in the last 12 months. - Maintained availability under our asset backed revolving credit facility to approximately
$1.7 billion . - Weighted average pre-tax interest rate, inclusive of
$1.25 billion of fixed-to-floating swaps at3.55% , was approximately5.8% . Annual cash interest expense based on the current debt structure and benchmark rates is approximately$214 million , or approximately$230 million inclusive of non-cash deferred financing fees. Our debt structure is approximately89% /11% fixed-to-floating after giving effect to all interest rate swaps. - No debt maturities prior to June 15, 2025. We have ample liquidity available to redeem or refinance our
$527 million 2025 notes, using either our asset backed revolver or other sources of capital, and intend to do so opportunistically prior to maturity in a manner that optimizes our interest costs. Our next debt maturity is in 2027. - Leverage is at 3.4x based on our last 12 months Adjusted EBITDA from continuing operations of
$1,066 million , which is inside our target range of 3.0x to 3.5x. - Repurchased 1.6 million shares of Common Stock for
$62 million in the third quarter 2024, contributing to a3.3% reduction in our share count over the 12 months ending September 30, 2024.
2024 Outlook 2, 3, 4
This guidance is subject to risks and uncertainties, including those described in "Forward-Looking Statements" below.
$M | 2023 Results From Continuing Operations | 2024 Outlook | |
Revenue | |||
Adjusted EBITDA2,3 | |||
Net CAPEX3,4 | |||
1 - Assumes common shares outstanding as of September 30, 2024 versus common shares outstanding as of September 30, 2023.
2 - Adjusted EBITDA from continuing operations, Adjusted EBITDA Margin from continuing operations, Adjusted income from continuing operations, Adjusted Diluted Earnings Per Share, Adjusted Weighted Average Diluted Shares Outstanding, Free Cash Flow, Free Cash Flow Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Net Debt to Adjusted EBITDA, and Return on Invested Capital are non-GAAP financial measures. Further information and reconciliations for these non-GAAP measures to the most directly comparable financial measure under generally accepted accounting principles in the US ("GAAP") are included at the end of this press release.
3 - Information reconciling forward-looking Adjusted EBITDA, Net CAPEX, and Free Cash Flow to GAAP financial measures is unavailable to the Company without unreasonable effort and therefore neither the most comparable GAAP measures nor reconciliations to the most comparable GAAP measures are provided.
4 - Net CAPEX is a non-GAAP financial measure. Please see the non-GAAP reconciliation tables included at the end of this press release.
5 - Free Cash Flow incorporates results from discontinued operations. For comparability, we add back discontinued operations to reported revenue to calculate Free Cash Flow Margin.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA Margin from continuing operations, Adjusted income from continuing operations, Adjusted diluted earnings per share, Adjusted Weighted Average Diluted Shares Outstanding, Free Cash Flow, Adjusted Free Cash Flow, Free Cash Flow Margin, Adjusted Free Cash Flow Margin, Return on Invested Capital, Net CAPEX, and Net Debt to Adjusted EBITDA ratio. Adjusted EBITDA is defined as net income plus net interest (income) expense, income tax expense (benefit), depreciation and amortization adjusted to exclude certain non-cash items and the effect of what we consider transactions or events not related to our core business operations, including net currency gains and losses, goodwill and other impairment charges, restructuring costs, costs to integrate acquired companies, costs incurred related to transactions, and other discrete expenses. Adjusted EBITDA Margin from continuing operations is defined as Adjusted EBITDA divided by revenue. Adjusted income from continuing operations is defined as income from continuing operations plus certain non-cash items and the effect of what we consider transactions or events not related to our core business operations, including goodwill and other impairment charges, restructuring costs, costs to integrate acquired companies, costs incurred related to transactions, and other discrete expenses. Adjusted diluted earnings per share is defined as adjusted income from continuing operations divided by Adjusted diluted weighted average common shares outstanding. The calculation of Adjusted Weighted Average Diluted Shares Outstanding includes shares related to stock awards that are dilutive for Adjusted diluted earnings per share. Free Cash Flow is defined as net cash provided by operating activities, less purchases of, and proceeds from the sale of, rental equipment and property, plant and equipment, which are all included in cash flows from investing activities. Adjusted Free Cash Flow is defined as Free Cash Flow excluding one-time, nonrecurring payments for the McGrath termination fee and transaction costs from terminated acquisitions. Free Cash Flow Margin is defined as Free Cash Flow divided by revenue. Adjusted Free Cash Flow Margin is defined as Adjusted Free Cash Flow divided by revenue. Return on Invested Capital is defined as adjusted earnings before interest and amortization divided by average invested capital. Adjusted earnings before interest and amortization is defined as Adjusted EBITDA (see definition above) reduced by depreciation and estimated statutory taxes. Given we are not a significant US taxpayer due to our current tax attributes, we include estimated taxes at our current statutory tax rate of approximately
Information regarding the most comparable GAAP financial measures and reconciling forward-looking Adjusted EBITDA, Net CAPEX, and Free Cash Flow to those GAAP financial measures is unavailable to the Company without unreasonable effort. We cannot provide the most comparable GAAP financial measures nor reconciliations of forward-looking Adjusted EBITDA, Net CAPEX, and Free Cash Flow to GAAP financial measures because certain items required for such reconciliations are outside of our control and/or cannot be reasonably predicted, such as the provision for income taxes. Preparation of such reconciliations would require a forward-looking balance sheet, statement of income and statement of cash flow, prepared in accordance with GAAP, and such forward-looking financial statements are unavailable to the Company without unreasonable effort. Although we provide ranges of Adjusted EBITDA and Net CAPEX that we believe will be achieved, we cannot accurately predict all the components of the Adjusted EBITDA and Net CAPEX calculations. The Company provides Adjusted EBITDA and Net CAPEX guidance because we believe that Adjusted EBITDA and Net CAPEX, when viewed with our results under GAAP, provides useful information for the reasons noted above.
Conference Call Information
WillScot will host a conference call and webcast to discuss its third quarter 2024 results and 2024 outlook at 5:30 p.m. Eastern Time on Thursday, October 30, 2024. To access the live call by phone, use the following link: https://register.vevent.com/register/BI16186e91b1b24f7ca4b39fa17a26c1ac
You will be provided with dial-in details after registering. To avoid delays, we recommend that participants dial into the conference call 15 minutes ahead of the scheduled start time. A live webcast will also be accessible via the "Events & Presentations" section of the Company's investor relations website: www.investors.willscot.com. Choose "Events" and select the information pertaining to the WillScot Third Quarter 2024 Conference Call. Additionally, there will be slides accompanying the webcast. Please allow at least 15 minutes prior to the call to register, download and install any necessary software. For those unable to listen to the live broadcast, an audio webcast of the call will be available for 12 months on the Company’s investor relations website.
About WillScot
Listed on the Nasdaq stock exchange under the ticker symbol “WSC,” WillScot is the premier provider of highly innovative and turnkey space solutions in North America. The Company’s comprehensive range of products includes modular office complexes, mobile offices, classrooms, temporary restrooms, portable storage containers, protective buildings and climate-controlled units, and clearspan structures, as well as a curated selection of furnishings, appliances, and other supplementary services, ensuring turnkey solutions for its customers. Headquartered in Phoenix, Arizona, and operating from a network of approximately 260 branch locations and additional drop lots across the United States, Canada, and Mexico, WillScot’s business services are essential for diverse customer segments spanning all sectors of the economy.
Forward-Looking Statements
This news release contains forward-looking statements (including the guidance/outlook contained herein) within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. The words "estimates," "expects," "anticipates," "believes," "forecasts," "plans," "intends," "may," "will," "should," "shall," "outlook," "guidance," "see," "have confidence" and variations of these words and similar expressions identify forward-looking statements, which are generally not historical in nature. Certain of these forward-looking statements include statements relating to: our mergers and acquisitions pipeline, acceleration of our run rate, acceleration toward and the timing of our achievement of our three to five year milestones, growth and acceleration of cash flow, driving higher returns on invested capital, and Adjusted EBITDA margin expansion, as well as statements involving the proposed acquisition of McGrath (the “Proposed Transaction”), including anticipated time of closing, the expected scale, operating efficiency and synergies, stockholder, employee and customer benefits, the amount and timing of revenue and expense synergies, future financial benefits and operating results, expectations relating to the combined customer base and rental fleet, and tax treatment for the acquisition. Forward-looking statements are subject to a number of risks, uncertainties, assumptions and other important factors, many of which are outside our control, which could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Although the Company believes that these forward-looking statements are based on reasonable assumptions, they are predictions and we can give no assurance that any such forward-looking statement will materialize. Important factors that may affect actual results or outcomes include, among others, our ability to acquire and integrate new assets and operations; our ability to judge the demand outlook; our ability to achieve planned synergies related to acquisitions; regulatory approvals; our ability to successfully execute our growth strategy, manage growth and execute our business plan; our estimates of the size of the markets for our products; the rate and degree of market acceptance of our products; the success of other competing modular space and portable storage solutions that exist or may become available; rising costs and inflationary pressures adversely affecting our profitability; potential litigation involving our Company; general economic and market conditions impacting demand for our products and services and our ability to benefit from an inflationary environment; our ability to maintain an effective system of internal controls; and such other risks and uncertainties described in the periodic reports we file with the SEC from time to time (including our Form 10-K for the year ended December 31, 2023), which are available through the SEC’s EDGAR system at www.sec.gov and on our website. Any forward-looking statement speaks only at the date on which it is made, and the Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Additional Information and Where to Find It
Additional information can be found on the company's website at www.willscot.com.
Contact Information | ||
Investor Inquiries: | Media Inquiries: | |
Nick Girardi | Jake Saylor | |
investors@willscot.com | jake.saylor@willscot.com | |
WillScot Holdings Corporation | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands, except share and per share data) | 2024 | 2023 | 2024 | 2023 | |||||||||||
Revenues: | |||||||||||||||
Leasing and services revenue: | |||||||||||||||
Leasing | $ | 455,578 | $ | 466,769 | $ | 1,374,771 | $ | 1,356,040 | |||||||
Delivery and installation | 114,765 | 115,598 | 323,274 | 334,982 | |||||||||||
Sales revenue: | |||||||||||||||
New units | 17,850 | 10,155 | 52,727 | 29,816 | |||||||||||
Rental units | 13,239 | 12,312 | 42,431 | 31,553 | |||||||||||
Total revenues | 601,432 | 604,834 | 1,793,203 | 1,752,391 | |||||||||||
Costs: | |||||||||||||||
Costs of leasing and services: | |||||||||||||||
Leasing | 96,050 | 104,331 | 296,692 | 300,402 | |||||||||||
Delivery and installation | 91,775 | 82,081 | 250,787 | 238,437 | |||||||||||
Costs of sales: | |||||||||||||||
New units | 9,665 | 5,096 | 31,296 | 16,099 | |||||||||||
Rental units | 6,246 | 6,682 | 22,207 | 16,203 | |||||||||||
Depreciation of rental equipment | 76,212 | 66,950 | 226,731 | 190,556 | |||||||||||
Gross profit | 321,484 | 339,694 | 965,490 | 990,694 | |||||||||||
Other operating expenses: | |||||||||||||||
Selling, general and administrative | 150,865 | 151,983 | 493,043 | 449,663 | |||||||||||
Other depreciation and amortization | 23,108 | 17,852 | 59,163 | 52,371 | |||||||||||
Termination fee | 180,000 | — | 180,000 | — | |||||||||||
Impairment loss on intangible asset | — | — | 132,540 | — | |||||||||||
Restructuring costs | 2,334 | — | 8,540 | — | |||||||||||
Lease impairment expense and other related charges, net | 144 | — | 867 | 22 | |||||||||||
Currency (gains) losses, net | (129 | ) | 96 | (94 | ) | 6,885 | |||||||||
Other expense (income), net | 380 | (8,336 | ) | 1,935 | (14,533 | ) | |||||||||
Operating (loss) income | (35,218 | ) | 178,099 | 89,496 | 496,286 | ||||||||||
Interest expense, net | 55,823 | 53,803 | 167,959 | 145,915 | |||||||||||
(Loss) income from continuing operations before income tax | (91,041 | ) | 124,296 | (78,463 | ) | 350,371 | |||||||||
Income tax (benefit) expense from continuing operations | (20,566 | ) | 32,780 | (17,377 | ) | 94,855 | |||||||||
(Loss) income from continuing operations | (70,475 | ) | 91,516 | (61,086 | ) | 255,516 | |||||||||
Discontinued operations: | |||||||||||||||
Income from discontinued operations before income tax | — | — | — | 4,003 | |||||||||||
Gain on sale of discontinued operations | — | — | — | 176,078 | |||||||||||
Income tax expense from discontinued operations | — | — | — | 45,468 | |||||||||||
Income from discontinued operations | — | — | — | 134,613 | |||||||||||
Net (loss) income | $ | (70,475 | ) | $ | 91,516 | $ | (61,086 | ) | $ | 390,129 | |||||
(Loss) earnings per share from continuing operations: | |||||||||||||||
Basic | $ | (0.37 | ) | $ | 0.47 | $ | (0.32 | ) | $ | 1.27 | |||||
Diluted | $ | (0.37 | ) | $ | 0.46 | $ | (0.32 | ) | $ | 1.25 | |||||
Earnings per share from discontinued operations: | |||||||||||||||
Basic | $ | — | $ | — | $ | — | $ | 0.67 | |||||||
Diluted | $ | — | $ | — | $ | — | $ | 0.66 | |||||||
(Loss) earnings per share: | |||||||||||||||
Basic | $ | (0.37 | ) | $ | 0.47 | $ | (0.32 | ) | $ | 1.94 | |||||
Diluted | $ | (0.37 | ) | $ | 0.46 | $ | (0.32 | ) | $ | 1.91 | |||||
Weighted average shares: | |||||||||||||||
Basic | 188,281,346 | 196,198,638 | 189,362,364 | 201,042,902 | |||||||||||
Diluted | 188,281,346 | 199,258,304 | 189,362,364 | 204,461,042 |
WillScot Holdings Corporation | |||||||
Consolidated Balance Sheets | |||||||
(in thousands, except share data) | September 30, 2024 (unaudited) | December 31, 2023 | |||||
Assets | |||||||
Cash and cash equivalents | $ | 11,046 | $ | 10,958 | |||
Trade receivables, net of allowances for credit losses at September 30, 2024 and December 31, 2023 of | 445,869 | 451,130 | |||||
Inventories | 52,576 | 47,406 | |||||
Prepaid expenses and other current assets | 64,750 | 57,492 | |||||
Assets held for sale – current | 4,078 | 2,110 | |||||
Total current assets | 578,319 | 569,096 | |||||
Rental equipment, net | 3,401,198 | 3,381,315 | |||||
Property, plant and equipment, net | 353,338 | 340,887 | |||||
Operating lease assets | 257,054 | 245,647 | |||||
Goodwill | 1,176,889 | 1,176,635 | |||||
Intangible assets, net | 260,539 | 419,709 | |||||
Other non-current assets | 9,882 | 4,626 | |||||
Total long-term assets | 5,458,900 | 5,568,819 | |||||
Total assets | $ | 6,037,219 | $ | 6,137,915 | |||
Liabilities and equity | |||||||
Accounts payable | $ | 107,789 | $ | 86,123 | |||
Accrued expenses | 168,462 | 129,621 | |||||
Accrued employee benefits | 24,551 | 45,564 | |||||
Deferred revenue and customer deposits | 249,973 | 224,518 | |||||
Operating lease liabilities – current | 65,708 | 57,408 | |||||
Current portion of long-term debt | 22,933 | 18,786 | |||||
Total current liabilities | 639,416 | 562,020 | |||||
Long-term debt | 3,607,957 | 3,538,516 | |||||
Deferred tax liabilities | 492,152 | 554,268 | |||||
Operating lease liabilities – non-current | 192,133 | 187,837 | |||||
Other non-current liabilities | 51,482 | 34,024 | |||||
Long-term liabilities | 4,343,724 | 4,314,645 | |||||
Total liabilities | 4,983,140 | 4,876,665 | |||||
Preferred Stock: | — | — | |||||
Common Stock: | 19 | 20 | |||||
Additional paid-in-capital | 1,960,163 | 2,089,091 | |||||
Accumulated other comprehensive loss | (69,924 | ) | (52,768 | ) | |||
Accumulated deficit | (836,179 | ) | (775,093 | ) | |||
Total shareholders' equity | 1,054,079 | 1,261,250 | |||||
Total liabilities and shareholders' equity | $ | 6,037,219 | $ | 6,137,915 |
Reconciliation of Non-GAAP Financial Measures |
In addition to using GAAP financial measurements, we use certain non-GAAP financial information that we believe is important for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of our ongoing operations and analyze our business performance and trends.
We evaluate business performance on Adjusted EBITDA, a non-GAAP measure that excludes certain items as described below. We believe that evaluating performance excluding such items is meaningful because it provides insight with respect to intrinsic and ongoing operating results of the Company.
We also regularly evaluate gross profit to assist in the assessment of the operational performance. We consider Adjusted EBITDA to be the more important metric because it more fully captures the business performance, inclusive of indirect costs.
We also evaluate Free Cash Flow, a non-GAAP measure that provides useful information concerning cash flow available to fund our capital allocation alternatives.
Adjusted EBITDA From Continuing Operations
We define EBITDA as net income (loss) plus interest (income) expense, income tax expense (benefit), depreciation and amortization. Our adjusted EBITDA ("Adjusted EBITDA") reflects the following further adjustments to EBITDA to exclude certain non-cash items and the effect of what we consider transactions or events not related to our core business operations:
- Goodwill and other impairment charges related to non-cash costs associated with impairment charges to goodwill, other intangibles, rental fleet and property, plant and equipment.
- Restructuring costs, lease impairment expense, and other related charges associated with restructuring plans designed to streamline operations and reduce costs including employee termination costs.
- Currency (gains) losses, net on monetary assets and liabilities denominated in foreign currencies other than the subsidiaries’ functional currency.
- Transaction costs including legal and professional fees and other transaction specific related costs.
- Costs to integrate acquired companies, including outside professional fees, non-capitalized costs associated with system integrations, non-lease branch and fleet relocation expenses, employee training costs, and other costs required to realize cost or revenue synergies.
- Non-cash charges for stock compensation plans.
- Other expense, including consulting expenses related to certain one-time projects, financing costs not classified as interest expense, and gains and losses on disposals of property, plant, and equipment.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider the measure in isolation or as a substitute for net income (loss), cash flow from operations or other methods of analyzing the Company’s results as reported under GAAP. Some of these limitations are:
- Adjusted EBITDA does not reflect changes in, or cash requirements for our working capital needs;
- Adjusted EBITDA does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;
- Adjusted EBITDA does not reflect our tax expense or the cash requirements to pay our taxes;
- Adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
- Adjusted EBITDA does not reflect the impact on earnings or changes resulting from matters that we consider not to be indicative of our future operations;
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
- Other companies in our industry may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.
Because of these limitations, Adjusted EBITDA should not be considered as discretionary cash available to reinvest in the growth of our business or as measures of cash that will be available to meet our obligations.
The following table provides reconciliations of Income (loss) from continuing operations to Adjusted EBITDA from continuing operations:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||
(Loss) income from continuing operations | $ | (70,475 | ) | $ | 91,516 | $ | (61,086 | ) | $ | 255,516 | |||||
Income tax (benefit) expense from continuing operations | (20,566 | ) | 32,780 | (17,377 | ) | 94,855 | |||||||||
Interest expense | 55,823 | 53,803 | 167,959 | 145,915 | |||||||||||
Depreciation and amortization | 99,320 | 84,802 | 285,894 | 242,927 | |||||||||||
Currency (gains) losses, net | (129 | ) | 96 | (94 | ) | 6,885 | |||||||||
Restructuring costs, lease impairment expense and other related charges, net | 2,478 | — | 9,407 | 22 | |||||||||||
Termination fee | 180,000 | — | 180,000 | — | |||||||||||
Impairment loss on intangible asset | — | — | 132,540 | — | |||||||||||
Transaction costs | 235 | 787 | 275 | 787 | |||||||||||
Integration costs | 1,457 | 780 | 7,400 | 6,900 | |||||||||||
Stock compensation expense | 9,534 | 8,636 | 28,247 | 26,134 | |||||||||||
Other | 9,186 | (7,720 | ) | 45,283 | (6,278 | ) | |||||||||
Adjusted EBITDA from continuing operations | $ | 266,863 | $ | 265,480 | $ | 778,448 | $ | 773,663 | |||||||
Adjusted EBITDA Margin From Continuing Operations
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. Management believes that the presentation of Adjusted EBITDA Margin provides useful information to investors regarding the performance of our business. The following table provides comparisons of Adjusted EBITDA Margin to Gross Profit Margin:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||
Adjusted EBITDA from continuing operations | $ | 266,863 | $ | 265,480 | $ | 778,448 | $ | 773,663 | |||||||
Revenue (B) | $ | 601,432 | $ | 604,834 | $ | 1,793,203 | $ | 1,752,391 | |||||||
Adjusted EBITDA Margin from Continuing Operations (A/B) | 44.4 | % | 43.9 | % | 43.4 | % | 44.1 | % | |||||||
Gross profit (C) | $ | 321,484 | $ | 339,694 | $ | 965,490 | $ | 990,694 | |||||||
Gross Profit Margin (C/B) | 53.5 | % | 56.2 | % | 53.8 | % | 56.5 | % | |||||||
Net Debt to Adjusted EBITDA From Continuing Operations Ratio
Net Debt to Adjusted EBITDA ratio is defined as Net Debt divided by Adjusted EBITDA from continuing operations from the last twelve months. We define Net Debt as total debt from continuing operations net of total cash and cash equivalents from continuing operations. Management believes that the presentation of Net Debt to Adjusted EBITDA ratio provides useful information to investors regarding the performance of our business. The following table provides a reconciliation of Net Debt to Adjusted EBITDA ratio:
(in thousands) | September 30, 2024 | |
Long-term debt | $ | 3,607,957 |
Current portion of long-term debt | 22,933 | |
Total debt | 3,630,890 | |
Cash and cash equivalents | 11,046 | |
Net debt (A) | $ | 3,619,844 |
Adjusted EBITDA from continuing operations from the three months ended December 31, 2023 | $ | 287,802 |
Adjusted EBITDA from continuing operations from the three months ended March 31, 2024 | 248,009 | |
Adjusted EBITDA from continuing operations from the three months ended June 30, 2024 | 263,576 | |
Adjusted EBITDA from continuing operations from the three months ended September 30, 2024 | 266,863 | |
Adjusted EBITDA from continuing operations from the last twelve months (B) | $ | 1,066,250 |
Net Debt to Adjusted EBITDA ratio (A/B) | 3.4 | |
Adjusted Income from Continuing Operations and Adjusted Diluted Earnings Per Share
We define adjusted income from continuing operations as income from continuing operations, plus certain non-cash items and the effect of what we consider transactions not related to our core business operations including:
- Goodwill and other impairment charges related to non-cash costs associated with impairment charges to goodwill, other intangibles, rental fleet and property, plant and equipment.
- Restructuring costs, lease impairment expense, and other related charges associated with restructuring plans designed to streamline operations and reduce costs including employee and lease termination costs.
- Transaction costs including legal and professional fees and other transaction specific related costs.
- Costs to integrate acquired companies, including outside professional fees, non-capitalized costs associated with system integrations, non-lease branch and fleet relocation expenses, employee training costs, and other costs required to realize cost or revenue synergies.
- Transaction costs, including legal and professional fees and other transaction-specific costs, for terminated acquisitions.
We define adjusted diluted earnings per share from continuing operations as adjusted income from continuing operations divided by adjusted diluted weighted average common shares outstanding. Management believes that the presentation of Adjusted Income and Adjusted Diluted Earnings Per Share provide useful information to investors regarding the performance of our business.
The following table provides reconciliations of income from continuing operations to adjusted income from continuing operations and comparisons of diluted earnings per share to adjusted diluted earnings per share:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands, except share data) | 2024 | 2023 | 2024 | 2023 | |||||||||||
(Loss) income from continuing operations | $ | (70,475 | ) | $ | 91,516 | $ | (61,086 | ) | $ | 255,516 | |||||
Restructuring costs, lease impairment expense and other related charges, net | 2,478 | — | 9,407 | 22 | |||||||||||
Termination fee | 180,000 | — | 180,000 | — | |||||||||||
Impairment loss on intangible asset | — | — | 132,540 | — | |||||||||||
Transaction costs | 235 | 787 | 275 | 787 | |||||||||||
Integration costs | 1,457 | 780 | 7,400 | 6,900 | |||||||||||
Transaction costs from terminated acquisitions | 8,704 | 752 | 43,884 | 1,217 | |||||||||||
Estimated tax impact1 | (50,147 | ) | (603 | ) | (97,112 | ) | (2,321 | ) | |||||||
Adjusted income from continuing operations | $ | 72,252 | $ | 93,232 | $ | 215,308 | $ | 262,121 | |||||||
(Loss) income from continuing operations per adjusted diluted share2 | $ | (0.37 | ) | $ | 0.46 | $ | (0.32 | ) | $ | 1.25 | |||||
Restructuring costs, lease impairment expense and other related charges, net | 0.01 | — | 0.05 | — | |||||||||||
Termination fee | 0.95 | — | 0.94 | — | |||||||||||
Impairment loss on intangible asset | — | — | 0.69 | — | |||||||||||
Transaction costs | — | 0.01 | — | — | |||||||||||
Integration costs | 0.01 | — | 0.04 | 0.03 | |||||||||||
Transaction costs from terminated acquisitions | 0.05 | — | 0.23 | 0.01 | |||||||||||
Estimated tax impact1 | (0.27 | ) | — | (0.51 | ) | (0.01 | ) | ||||||||
Adjusted Diluted Earnings Per Share | $ | 0.38 | $ | 0.47 | $ | 1.12 | $ | 1.28 | |||||||
Weighted average diluted shares outstanding | 188,281,346 | 199,258,304 | 189,362,364 | 204,461,042 | |||||||||||
Adjusted weighted average dilutive shares outstanding2 | 190,181,020 | 199,258,304 | 191,662,791 | 204,461,042 |
1 We include estimated taxes at our current statutory tax rate of approximately
2 For the three and nine months ended September 30, 2024, diluted loss per share is based on weighted average diluted shares outstanding of 188,281,346 and 189,362,364, respectively, which excluded shares related to stock awards, as the effect would be anti-dilutive. The calculation of adjusted diluted earnings per share for the three and nine months ended September 30, 2024 is based on adjusted weighted average diluted shares outstanding of 190,181,020 and 191,662,791, respectively, as the shares related to stock awards are dilutive for adjusted diluted earnings per share.
Free Cash Flow, Adjusted Free Cash Flow, Free Cash Flow Margin, and Adjusted Free Cash Flow Margin
Free Cash Flow and Adjusted Free Cash Flow are non-GAAP measures. We define Free Cash Flow as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and property, plant and equipment, which are all included in cash flows from investing activities. We define Adjusted Free Cash Flow as Free Cash Flow excluding one-time, nonrecurring payments for the McGrath termination fee and transaction costs from terminated acquisitions. Free Cash Flow Margin is defined as Free Cash Flow divided by Total Revenue including discontinued operations. Adjusted Free Cash Flow Margin is defined as Adjusted Free Cash Flow divided by Total Revenue including discontinued operations. Management believes that the presentation of Free Cash Flow, Adjusted Free Cash Flow, Free Cash Flow Margin, and Adjusted Free Cash Flow Margin provides useful additional information concerning cash flow available to fund our capital allocation alternatives. Free Cash Flow and Adjusted Free Cash Flow as presented include amounts for the former UK Storage Solutions segment through January 31, 2023. The following table provides reconciliations of Free Cash Flow, Adjusted Free Cash Flow, Free Cash Flow Margin and Adjusted Free Cash Flow Margin:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||
Net cash (used in) provided by operating activities | $ | (1,562 | ) | $ | 190,998 | $ | 382,725 | $ | 541,918 | ||||||
Purchase of rental equipment and refurbishments | (69,398 | ) | (63,388 | ) | (206,989 | ) | (166,097 | ) | |||||||
Proceeds from sale of rental equipment | 13,238 | 12,720 | 43,906 | 37,974 | |||||||||||
Purchase of property, plant and equipment | (3,318 | ) | (5,563 | ) | (16,119 | ) | (16,752 | ) | |||||||
Proceeds from the sale of property, plant and equipment | 918 | 13,001 | 1,133 | 13,266 | |||||||||||
Free Cash Flow (A) | $ | (60,122 | ) | $ | 147,768 | $ | 204,656 | $ | 410,309 | ||||||
Cash paid for termination Fee | 180,000 | — | 180,000 | — | |||||||||||
Cash paid for transaction costs from terminated acquisitions | 23,266 | — | 32,451 | — | |||||||||||
Adjusted Free Cash Flow (B) | $ | 143,144 | $ | 147,768 | $ | 417,107 | $ | 410,309 | |||||||
Revenue from continuing operations (C) | $ | 601,432 | $ | 604,834 | $ | 1,793,203 | $ | 1,752,391 | |||||||
Revenue from discontinued operations | — | — | — | 8,694 | |||||||||||
Total Revenue including discontinued operations (D) | $ | 601,432 | $ | 604,834 | $ | 1,793,203 | $ | 1,761,085 | |||||||
Free Cash Flow Margin (A/D) | (10.0 | )% | 24.4 | % | 11.4 | % | 23.3 | % | |||||||
Adjusted Free Cash Flow Margin (B/D) | 23.8 | % | 24.4 | % | 23.3 | % | 23.3 | % | |||||||
Net cash (used in) provided by operating activities (E) | $ | (1,562 | ) | $ | 190,998 | $ | 382,725 | $ | 541,918 | ||||||
Net cash (used in) provided by operating activities margin (E/D) | (0.3 | )% | 31.6 | % | 21.3 | % | 30.8 | % | |||||||
Net CAPEX
We define Net CAPEX as purchases of rental equipment and refurbishments and purchases of property, plant and equipment (collectively, "Total Capital Expenditures"), less proceeds from the sale of rental equipment and proceeds from the sale of property, plant and equipment (collectively, "Total Proceeds"), which are all included in cash flows from investing activities. Management believes that the presentation of Net CAPEX provides useful information regarding the net capital invested in our rental fleet and property, plant and equipment each year to assist in analyzing the performance of our business. As presented below, Net CAPEX includes amounts for the former UK Storage Solutions segment through January 31, 2023.
The following table provides reconciliations of Net CAPEX, which is calculated using metrics from our Statements of Cash Flows:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||
Purchases of rental equipment and refurbishments | $ | (69,398 | ) | $ | (63,388 | ) | $ | (206,989 | ) | $ | (166,097 | ) | |||
Proceeds from sale of rental equipment | 13,238 | 12,720 | 43,906 | 37,974 | |||||||||||
Net CAPEX for Rental Equipment | (56,160 | ) | (50,668 | ) | (163,083 | ) | (128,123 | ) | |||||||
Purchases of property, plant and equipment | (3,318 | ) | (5,563 | ) | (16,119 | ) | (16,752 | ) | |||||||
Proceeds from sale of property, plant and equipment | 918 | 13,001 | 1,133 | 13,266 | |||||||||||
Net CAPEX | $ | (58,560 | ) | $ | (43,230 | ) | $ | (178,069 | ) | $ | (131,609 | ) | |||
Return on Invested Capital
Return on Invested Capital is defined as Adjusted earnings before interest and amortization divided by Average Invested Capital. Management believes that the presentation of Return on Invested Capital provides useful information regarding the long-term health and profitability of the business relative to the Company's cost of capital. We define Adjusted earnings before interest and amortization as Adjusted EBITDA (see reconciliation above) reduced by depreciation and estimated taxes. Given we are not a significant US taxpayer due to our current tax attributes, we include estimated taxes at our current statutory tax rate of approximately
The Average Invested Capital is calculated as an average of Net Assets, a four quarter average for annual metrics and two quarter average for quarterly metrics. Net assets is defined for purposes of the calculation below as total assets less goodwill, intangible assets, net, and all non-interest bearing liabilities.
The following table provides reconciliations of Return on Invested Capital and includes amounts for the former UK Storage Solutions segment through January 31, 2023.
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||
Total Assets | $ | 6,037,219 | $ | 6,075,478 | $ | 6,037,219 | $ | 6,075,478 | |||||||
Goodwill | (1,176,889 | ) | (1,158,076 | ) | (1,176,889 | ) | (1,158,076 | ) | |||||||
Intangible assets, net | (260,539 | ) | (401,313 | ) | (260,539 | ) | (401,313 | ) | |||||||
Total Liabilities | (4,983,140 | ) | (4,762,842 | ) | (4,983,140 | ) | (4,762,842 | ) | |||||||
Long Term Debt | 3,607,957 | 3,460,066 | 3,607,957 | 3,460,066 | |||||||||||
Net Assets, as defined above | $ | 3,224,608 | $ | 3,213,313 | $ | 3,224,608 | $ | 3,213,313 | |||||||
Average Invested Capital (A) | $ | 3,218,527 | $ | 3,133,997 | $ | 3,209,496 | $ | 3,104,225 | |||||||
Adjusted EBITDA | $ | 266,863 | $ | 265,480 | $ | 778,448 | $ | 773,663 | |||||||
Depreciation | (87,415 | ) | (78,864 | ) | (259,264 | ) | (225,114 | ) | |||||||
Adjusted EBITA (B) | $ | 179,448 | $ | 186,616 | $ | 519,184 | $ | 548,549 | |||||||
Statutory Tax Rate (C) | 26 | % | 26 | % | 26 | % | 26 | % | |||||||
Estimated Tax (B*C) | $ | 46,656 | $ | 48,520 | $ | 134,988 | $ | 142,623 | |||||||
Adjusted earnings before interest and amortization (D) | $ | 132,792 | $ | 138,096 | $ | 384,196 | $ | 405,926 | |||||||
ROIC (D/A), annualized | 16.5 | % | 17.6 | % | 16.0 | % | 17.4 | % |
FAQ
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